Winding up petition

In any of the above instance's the presentation of a winding up petition against your customer may be appropriate.

Although a winding up petition should not be abused as a debt recovery instrument, it can be presented against a company if you believe your customer to be insolvent – unable to pay its debts as they fall due. In this instance your customer could be wound up by the court; compulsory liquidation.

To avoid being wound up by the court your customer could pay its debt to you before the court hearing date. To do this would demonstrate your customer can pay its debts as they fall due – therefore not insolvent and avoid being wound up.

Bank Accounts and Other Assets Frozen

Once a winding up petition is issued against your customer:

Steps can be taken to freeze their bank accounts

they cannot, without a court order, sell, transfer or trade with any of the company's assets

you can ask the Court to appoint a provisional liquidator over your customer's assets if you have good reason to believe assets could reduce or disappear before the court hearing date

Why Would Your Customer Pay Up?

Once served your customer will want your winding up petition withdrawn at the earliest opportunity in order to:

not have its bank accounts frozen

freely use its assets

not have other creditors join your winding up petition

prove they can pay their debts and therefore not insolvent

avoid possible ruin of their business

What More You Should Know

Remember, your customer will want to demonstrate their business is not insolvent and desire for normal trading without the above impediments.

Used in insolvency proceedings, a winding-up petition is a very serious instrument. It is described by many as a nuclear-guided missile.

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